Sourcing is part of the supply chain management. Any importer, manufacturer, business owner, or retail store will need to look at sourcing products, goods, and services. Sourcing is an essential part of any procurement process.
Product sourcing is when you source or look to find a supplier for a product you need. Strategic sourcing is strategically sourcing products. Strategic sourcing is not about the lowest purchase price but the lowest overall cost. Product sourcing and strategic sourcing are very similar, but strategic sourcing is sourcing with a plan in place.
Product Sourcing Defined
Product sourcing is about finding products that you can sell at the right price. For many people, when they think about product sourcing, they think about buying a product at the lowest possible purchase price. But, product sourcing is not simply a matter of just finding the product at the lowest price. Product sourcing is about making sure that the product is the price, quality, and quantity you need.
Product sourcing includes all of the ways you use to find a product. For example, it could be doing online research, going to a trade show, and asking for a friend’s reference. You do all the things to find or source the product at the price, quality, and quantity you need.
Product sourcing may seem very easy, but the truth is that product sourcing is one of the most difficult things for most importers, manufacturers, retail or e-commerce stores. The reason is that even if you find the right price, it may not be of the quality you need. Or the manufacture may not be the right fit for you and your business.
This is why finding the right partner for your product sourcing needs is not always very easy, especially in our industry of home decor and home furniture manufacturing, as we are a design based business that usually requires a lot of product development, new designs, trend colors, and finishes.
Why Strategic Sourcing Is Important
Since product sourcing and finding the right supply can be one of the most difficult things that any company can do, companies must source strategically. Strategic sourcing is the process of product sourcing but taking your sourcing to the next level with proper procedures for your product sourcing needs.
Strategic sourcing is a process that is driven by a goal, procedures, and need. It is also verifiable, meaning it has a system in place for your product sourcing requirements. In other words, it is not a haphazard kind of sourcing, but strategic sourcing is goal and process-driven.
Here is how you can strategically product source:
- Evaluate – Evaluate your current and potential sourcing opportunities and relationships. One of the most important things you can do is evaluate exactly what you need and why you need it. It is much easier for someone to tell you what they can or cannot do for you if they fully understand what you need and in terms of quality, quantity, and price.
- Assessing – Assessing your strategic sourcing partner is also important. Is this a person, company, or manufacture you can work with long term? Ideally, you want to try to find someone you can do business with for a long time. One of the reasons is that sourcing can be expensive, and finding the right supply will long-term save you time and money.
- Action Plan – The action plan and the procedures you have in place for sourcing is critical. Do you give your supplier detailed information or rough sketches of what you need? Do you have a clear indication of the colors, quality, and price that you need? These are all important things for you to understand when looking at a new product to source.
- Improvement Plans – One important aspect of strategic sourcing is that you constantly have an improvement plan in place. This means to evaluate and assess your sourcing needs and your sourcing strategy. Strategic sourcing is simply about having a system and processes in place for all your sourcing needs.
What makes strategic sourcing different from product sourcing is that strategic sourcing is not just about finding the lowest purchase price but is about finding the overall lowest cost. In simple terms, if you constantly need to be sourcing for the same product repeatedly, it will cost you money.
Listen To Our Podcast Why Product Development Is Essential Part of Global Trade below or by clicking here.
This is why strategic sourcing is not about the lowest purchase price but about the supplier or manufacturer that will give you the best overall costs. In other words, someone who gives you the quality, quantity, and on-time shipments.
If you must always change your manufacturing or sourcing supply, there are many hidden costs that you do not see in your final product costs. There is a lot of value in a supplier fully understanding your quality needs without you having to teach or instruct them each time; there is a great hidden economic value in that kind of knowledge and understanding.
Product Sourcing Vs Strategic Sourcing
Product sourcing and strategic sourcing are the same except for one main difference; strategic sourcing is all about having a defined plan for your product sourcing needs.
Strategic sourcing does not look for the lowest purchase price but the lowest overall costs. With strategic sourcing, you are also constantly looking to improve and reevaluate your organization’s purchasing activities.
Anyone looking to do any product sourcing should also strive to take their source to the next level to do strategic sourcing. A large part of strategic sourcing is about locating the right strategic sourcing partner to help you with your product needs.
If you are looking for a strategic partner to help you with home decor or home furniture manufacturing in Asia, we would love to talk to you to see how we can help you. Please feel free to contact Anita by clicking on this link or contacting us through our contact page. We would love to see how we can help you create, develop and manufacture amazing home decor and home furnishing products in Asia.
What Is The Difference Between Supply Chain Management and Logistics?
Supply chain management is about the collaboration and partnerships to get the goods from raw material to the end consumer; it is about the partnerships and collaborations within this supply chain process. Logistics is one part of the supply chain management; logistics is about moving the goods from one place to another. In some instances, the logistics providers will also store the goods and send them on to the end consumer.
You can learn more by reading our blog What Is The Difference Between Supply Chain Management and Logistics? by clicking here.
What Are The Benefits Of Supply Chain Management?
There are many benefits to supply chain management. The benefits of supply chain management include teamwork and collaboration, improved quality control, better efficiency and effectiveness, on-time deliveries, maximization of overhead costs, improved cash flow, risk mitigation, and shipping optimization. All of these areas are greatly helped by proper supply chain management.